MeCure seeks N6.8bn to fund operations

MeCure Industries Plc is seeking a N6.8 billion debt to fix short-term working capital and funding obligations.

According to FSDH Capital, the top pharmaceutical manufacturer plans to raise funds at 27 and 29 percent per annum across two tenors: 180 days and 266 days.

This comes two weeks after it secured a 10 percent equity investment from Zrosk Investment Management to boost its expansion plans and aid operational efficiency.

The company began installing its Beta-Lactam plant in 2023 to enable the production of combination antibiotics such as Amoxicillin-Clavulanic acid (Amoxyclav), a leading antibiotic for bacterial infections with a market size exceeding N500 billion.

Read also: MeCure defies funding hurdles to drive growth

It completed the installation of the plant in the first quarter of 2024 and secured approval from the National Agency for Food and Drug Administration Control (NAFDAC) to begin the production of the first locally manufactured alternative Amoxyclav 625mg.

This new product among others lined up are expected to significantly boost the company’s revenue growth.

“This new facility positions MeCure as the first local manufacturer to produce Amoxiclav locally. It is projected to generate N8 billion in revenue in 2024 at 65 percent capacity utilisation, increasing to N24 billion in 2025, according to an X post by Abdulrauf Bello, a Lagos-based investment manager.

In a previous analysis, Bello said MeCure’s growth run in the past few years has featured strong and stable margins, positioning the company to capture more value in the long run given the emerging trends in the Nigerian pharmaceutical industry.

He also noted that the firm has made significant investments reflected by its net working capital ratio of 41 percent as of 2023 and capital expenditure intensity of 48 percent.

Despite the challenging economic environment, MeCure has maintained a healthy profit margin. The company’s profitability has been supported by cost-effective operations, efficient supply chain management, and a focus on high-margin products.

Its operating profit rose by 194 percent to over N6 billion between 2018 and 2023 while profit after tax jumped by 580 percent to nearly N3 billion within the same period, according to the company’s financial statement.

Also, by investing in research and development, introducing innovative products, and building strong distribution partners, MeCure’s market share has steadily increased over the past five years, analysts say.

“The company is well-run and has prioritised operational efficiency. They have increased their capacity over the years and are set to grow continually year-on-year, Oluwafemi Olaleye, head of Health Banking, at FSDH Merchant Bank.

“They have digitised their processes, so they can extract the most out of their active pharmaceutical ingredients. They have also cut down on business costs to reduce the effect of inflationary pressures on their margins.”